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New Jersey business merger: Target sells its credit card business

New Jersey Target customers may not know that Target is selling its credit card business to TD Bank Group. The price of the business merger and sale is for the amount of the gross value of the outstanding receivables on the day the deal closes. That amount is currently $5.9 billion.

Target and TD Bank Group will serve different functions for the credit card business once the sale is final sometime in the first half of 2013. Target will remain the account servicer for issues such as billing and customer service. All of the credit decisions will be made by TD Bank Group, such as which applications will be accepted and what interest rates will be charged to customers. TD Bank will also handle all regulatory compliance and risk management functions.

The sale is pending approval from the appropriate regulatory agencies. Target expects to see a pre-tax increase in its third quarter of approximately $150 million. When the sale does close, Target expects that pre-tax increase to jump to between $350 million to $450 million.

Target expects to use the money from this business merger and sale to pay down its debt. Many companies, including some in New Jersey, sell off pieces of their operations in order to satisfy outstanding debt. However, in order for a sale to be successful, the company has to find the right buyer, negotiate a good price, and get the sale approved by the appropriate regulatory agencies, as required. Seeking advice and assistance with the sale of a portion of a business operation will give that sale the best chance of success.

Source: The Washington Post, "Target to sell credit card business to TD Bank Group for $5.9 billion," Oct. 23, 2012

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